Investors appear to be falling out of love with the once high-flying FAANG stocks.

Since May 6, when the Trump administration announced it will ratchet up tariffs – from 10% to 25% – on $200 billion worth of Chinese goods, the NYSE FANG Index (^NYFANG) has slid 11%, despite Facebook and Netflix having no direct exposure to China. That performance is far worse than the S&P 500 Index’s (^GSPC) 2.4% drop over the same period. FAANG stocks include Facebook (FB), Apple (AAPL), Amazon (AMZN), Netflix (NFLX), and Google (GOOG).

“I don’t think FAANG is dead,” Kristina Hooper, Invesco’s chief global markets strategist, said on Yahoo Finance’s The First Trade. “But it makes sense that it’s taking a pause.”

“We have to recognize that there’s an economic policy uncertainty story here,” Hooper says, “which is the longer these trade wars go on, we’re likely to see [capital expenditure] go down.”

Hooper points out that lower business investment could lead to lower productivity and that could impact stocks, whether or not they have exposure to China.

The software play

Ari Wald, Oppenhiemer & Co.’s head of technical analysis, says there’s still a play for tech, despite the China risk. “I think instead the real theme here is software,” Wald says.

“Names like Microsoft (MSFT) and Salesforce (CRM) and mobile payment names Visa (VISA) and MasterCard (MA)... that's what's going on right now in the tech space. That's where you want to be."

Wald says higher-growth companies should receive a premium in a low-growth world. “We see U.S. interest rates anchored by even lower rates overseas and in that environment, I think tech continues to outperform.

Hooper says tech’s exposure to China is exactly the thing that makes it attractive. “[The tech sector] is likely to continue to get beaten down over U.S.-China trade war concerns, so that spells opportunity.”

“If we expect growth to go down this year,” says Hooper, “we’ll be looking for areas like tech to provide that attractive growth level.”

Alexis Christoforous co-anchor of Yahoo Finance’s “The First Trade.” Follow her on Twitter @AlexisTVNews.

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